CBDC Is A “Better” Alternative to Stablecoins, Which Are Unlikely to be Regulated Money: BoE Governor

CBDC Is A “Better” Alternative to Stablecoins, Which Are Unlikely to be Regulated Money, says BoE Governor

Andrew Bailey, the Governor of Bank of England, yet again shared his criticism of stablecoins as he said that he did not believe that stablecoins are likely to evolve into safe, regulated money, which means central bank digital currencies (CBDCs) will more likely be the future for electronic payments.

“I think we have two choices broadly,” Bailey told lawmakers in the upper house of Britain’s parliament as part of an inquiry into the future of digital payments.

“Is it going to evolve to some world of (asset-) backed stablecoins which has money-like features which could be regulated? I must say … I am sceptical about that. Or … is the better contribution, particularly to financial stability, to say the better alternative to that may be a central bank currency of digital form?”

Commenting on stablecoins, Bailey said out of the $2.5 trillion crypto market cap, which is around the level of the FTSE 100, “95% of it is unbanked crypto-assets,” and the other 5% are stablecoins, “some of which are more stable than others.”

He also warned that crypto-assets do have “all the potential to be a threat to financial stability, which is why we think we do need to take action.”

This month, the BoE and Britain’s Treasury said they would hold formal consultations next year on whether to move forward with a CBDC, which, if approved, would be introduced in the second half of the decade.

On Tuesday, Bailey said he would not expect the BoE to offer digital bank accounts directly to savers.

“We do not see this as the Bank of England moving into the retail bank account business through a central bank digital currency,” he said while speaking to the Lord’s Economic Affairs Committee.

The BoE would instead provide the means of settlements to a regulated platform on which banks and even alternative digital wallets holders would operate. The central bank, Bailey said, would need power over these firms on the platform to protect privacy.

According to him, work on a CBDC was intended to solve cash and retail transactions problems and not as a tool to implement unconventional monetary policy such as a negative interest rate.

Bailey further warned that allowing the private sector to manage the shift toward digital currency could result in the bank regulating big tech firms. “The question we’re going to face is… would we try to regulate” private tech firms creating digital money, he said.

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Author: AnTy

CME Q3 Revenue Doubles Driven by BTC Futures, The Exchange Is Increasing Contract Limits for the ETF

CME Q3 Revenue Doubles Driven by Bitcoin Futures, The Regulated Exchange Is Increasing Contract Limits for ETF

Regulated platform CME Group reported its third-quarter profit more than doubling thanks to the approval of the exchange-traded funds (ETF) tied to CME Bitcoin futures seeing immense traction and trading in the futures exchange operators’ energy and interest rate products surging.

CME reported revenue of $1.1 billion and operating income of $614 million, while net income was $927 million for the third quarter.

The average daily volume of CME rose 14% from a year earlier to 17.8 million contracts. Its Bitcoin futures volume meanwhile increased by 170% versus the Q3 of 2020.

“The launch of ETFs based on CME’s bitcoin futures is validation from the industry of what we’ve known for some time, that CME bitcoin futures are the leading source of bitcoin price discovery in the industry,” Sean Tully, global head of financial and OTC products, said on a call with analysts.

In October, so far, the average daily volume for CME’s bitcoin contracts is up 57% compared to September, to over 12,000 contracts or over 60,000 equivalent BTC worth a record $3.5 billion per day.

Ether futures are also off to a good start since their launch in the first quarter of this year.

Additionally, CME Group is increasing the spot position limit on the amount of Bitcoin futures contracts that the ETF can own.

ProShares Bitcoin Strategy ETF (BITO) was the first Bitcoin ETF listed on the NYSE on Oct. 19 and became the fastest fund to amass $1 billion in assets. A few days later, Valkyrie Funds also launched its Bitcoin ETF.

Both the funds invest in bitcoin futures contracts listed on the CME Group and do not directly invest in cryptocurrency.

Currently, there is a strict limit of 2,000 spot futures contracts that ETFs can own, but the heightened interest in Bitcoin ETFs has caused the CME to increase this limit to 4,000 in November, said Terry Duffy, chairman, and chief executive of CME Group.

“We feel very confident from a risk perspective that we are not being reckless in any which way, shape, or form, and this has been vetted by our entire team and with the regulators. We’ve filed for those changes as we are confident that the product is mature enough to increase the size of the limit.”

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Author: AnTy

Cboe Planning A Re-Entry Into The Market By Acquiring Regulated Futures Exchange ErisX

Cboe is Planning A Re-Entry Into The Market By Acquiring Regulated Futures Exchange ErisX

Cboe Global Markets wants back in on the cryptocurrency market, and the latest step towards this direction is entering into a definitive agreement to acquire Eris Digital Holdings, a US-based spot exchange, and CFTC regulated futures exchange and clearinghouse.

In May this year, Cboe had filed for investment giant Fidelity’s Bitcoin ETF, saying concerns about potential manipulation of a Bitcoin ETF have been “sufficiently mitigated.”

Cboe had started feeling the FOMO last year when in December, it announced that it would launch a suite of tools, including crypto indexes, real-time ticks, and historical data.

The platform was the first to launch Bitcoin futures, along with CME, at the peak of the 2017 bull market. But after going through the 2018 bear market, in March 2019, Cboe delisted Bitcoin futures, when the price of BTC was about $4,000. Two years later, this March, Chairman, and CEO Ed Tilly said they “haven’t given up on” bitcoin futures.

Today, Bitcoin is trading at an all-time new high above $67,000.

While CME is leading regulated Bitcoin futures space with open interest on an all-time high of $4.77 billion with the first Bitcoin Futures ETF launch, Cboe is making a reentry through ErisX.

It plans to operate the crypto-asset business as Cboe Digital.

“I am confident that together we can not only meet the growing demand for institutional and retail trading solutions but also push the boundaries of digital asset innovation and unlock its next phase of growth.”

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Author: AnTy

Canada’s Security Regulator Prohibits Regulated Crypto Exchanges from Trading in Tether (USDT)

Canada’s Security Regulator Prohibits Regulated Crypto Exchanges from Trading in Tether (USDT)

The Ontario Securities Commission (OSC) has put the dominant stablecoin Tether (USDT) in its prohibited crypto assets list while allowing cryptocurrency exchanges to trade in Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).

This was disclosed in the regulatory documents regarding the exemptive relief applications in multiple jurisdictions for crypto exchange Coinberry Limited – “the first pure-play crypto trading platform in Canada to be fully registered” and Wealthsimple.

These two Toronto-based cryptocurrency exchanges are the only crypto asset dealers to receive regulatory approval by the OSC to operate their platforms in all Canadian provinces and territories for two years. Evan Thomas, Head of Legal at Wealthsimple Crypto, told a local publication in a statement,

“Canadians are still waiting to see the impact of regulatory standards being consistently applied across the industry. We hope regulators will ensure other platforms bring themselves into compliance with Canadian securities laws very soon.”

Both the companies’ documents put Tether in the “Appendix C – Prohibited Crypto Assets” section. It further noted that the application filer,

“Will not trade Crypto Contracts based on crypto assets, digital or virtual currencies, and digital or virtual tokens listed in Appendix C to this Decision.”

While not allowing trading in USDT, the documents do not specify the reason behind the decision. But it does put the disclaimer that OSC’s “decision should not be viewed as precedent for other filers.”

Tether, which has a market cap of $65.7 billion, settled its lawsuit with the New York Attorney General earlier this year for $18.5 million and is required to release quarterly transparency reports. As per the settlement, the stablecoin operator is also barred from doing business in New York.

In its latest transparency report, Tether said USDT is fully backed with 75.85% of it backed by Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper.

Late last month also came the report that the US DOJ is probing the largest stablecoin and its executives for bank fraud. Tether, however, said that it “routinely has an open dialogue with law enforcement agencies…as part of our commitment to cooperation, transparency, and accountability.”

But it looks like Canada’s securities regulator is not yet comfortable with Tether’s situation and may even perceive it as high-risk.

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Author: AnTy

Digital Assets “Not Regulated by the CFTC,” Even if They Are A Commodity: CFTC Commissioner

Digital Assets “Not Regulated by the CFTC,” Even if They Are A Commodity: CFTC Commissioner

One of the Commissioners of Commodity Futures Trading Commission (CFTC), Dawn D. Stump, released a statement on Monday detailing the agency’s regulatory authority over digital assets. She said,

“The CFTC’s regulatory oversight authority, as well as the application of our enforcement authority, must be well understood by the public. Only then can proper regulatory compliance be demanded.”

With the growth in cryptos’ popularity raising the question of how this new financial asset class is regulated in the US, Stump said, “there has often been a grossly inaccurate oversimplification,” regarding either categorizing them as securities regulated by the SEC or commodities regulated by the CFTC.

This misunderstanding about “US regulatory delineations has grown to a point” that Stump believes it now requires correction. In response, she has laid out ten points as to how and what the CFTC regulates.

These basics by Stump covers that commodity’s definition under CFTC is “extremely broad” and does not regulate cash commodities. So, “Even if a digital asset is a commodity, it is not regulated by the CFTC,” however, the CFTC does regulate derivatives on digital assets, it said.

She further states that when it comes to CFTC’s regulatory authority concerning crypto-assets, instead of considering whether a cryptocurrency is a commodity or security, the focus should be on whether a futures contract or other derivatives product is involved.

“The CFTC does not regulate commodities (regardless of whether or not they are securities); rather, it regulates derivatives—and this is true for digital assets just as for any other asset class.”

CFTC Chair Brian Quintez, a notable crypto advocate meanwhile, is preparing to spend August 31st as his last day in the office. In his statement upon departure, he said,

“During my term, the CFTC has overseen the listing of Bitcoin futures contracts; the custody of digital assets within the traditional clearing infrastructure; the proliferation of blockchain technology; the creation of cryptographic, tokenized commodities; and the rapid expansion of decentralized finance (DeFi), which purports to realize the ultimate transparency-competition-innovation-reward dynamic of a true free market.”

US president Joe Biden is reportedly planning to nominate acting CFTC Chair Rostim Behnem to serve as the full chairman.

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Author: AnTy

VanEck’s Launches Physically-Backed Bitcoin ETN on Deutsche Böerse Xetra

Asset manager VanEck has listed a Bitcoin ETN on the regulated segment of Deutsche Börse Xetra, as per the announcement on Wednesday.

This product will allow investors to participate directly in the performance of bitcoin but without buying the digital currency themselves, making it as “uncomplicated” as trading in shares or ETFs.

“Bitcoin’s low correlation to other asset classes makes it an excellent way to contribute to the diversification of a portfolio,” says Martijn Rozemuller, Head of Europe at VanEck.

For cold storage, VanEck is working with Liechtenstein-based regulated crypto custodian Bank Frick.

The most important feature of this Bitcoin ETPs is that it is physically backed by the real BTC meaning the

“money invested in the ETN is actually used to buy bitcoin.”

Negligible premium/discount to NAV, transparent holdings, transparent prices, and investor protections are its other features, shared Gabor Gurbacs, VanEck’s director of digital asset strategy.

“VanEck is committed to support Bitcoin-focused financial innovation. Bringing to market a physical, fully-backed major exchange-listed Bitcoin ETP was a top priority of our firm. We succeeded! We hope to serve many clients and partners in Europe, Asia and across the world using our innovative, investment-friendly and regulatory-conscious access vehicles,” Gurbacs said.

VanEck had also filed for a Bitcoin ETF in the US in collaboration with SolidX but like all the other proposals, it was rejected by the regulators. Before the final deadline, it actually withdrew its own proposal but said it will continue to pursue an exchange-traded fund.

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Author: AnTy

Dutch-based Security Token Exchange, Dusk Network Raises $1M From Bitfinex Parent

Dusk Network, a Dutch-based startup set to launch a regulated security token exchange, has received $1 million in funding from Bitfinex’s parent, iFinex. The exchange, whose operational niche is tokenized assets including exchange-traded funds (ETFs), commodities, and equities are set for debut in 2021, according to sources who informed TheBlock.

The Dusk announcement on September 1 noted that this milestone would see the firm expand its horizon in the crypto space, especially within the burgeoning European market. Consequently, its prospectus security token exchange by Dusk will operate under the region’s Markets in Financial Instruments Directive (MiFID II). This EU regulatory framework was designed to protect the interest of investors as well as increase transparency.

Notably, the recent $1 million funding towards Dusk’s initiative is not the first significant financing achievement the Amsterdam-domiciled firm has achieved. Back in 2018, Dusk Network raised roughly $8.85 million in private sales. Nonetheless, the company’s business lead, Jelle Pol, has clarified that Dusk Network’s security token exchange will be run as a separate unit.

This development comes as excitement around regulated security tokens builds up for institutional investors. With the Netherlands positioning itself as a ‘crypto valley’, the country’s financial market regulations on tokenized assets are among the most advanced in the world. In fact, the country’s central bank has since offered to lead the European Union in CBDC development and integration.

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Author: Edwin Munyui

US-based FinCEN Regulated CoinZoom Launches Crypto Exchange and Visa Prepaid Card

A crypto FinCEN regulated crypto exchange launched its own debit card with which digital asset holders can make payments for services and goods using their digital assets.

CoinZoom is based in Utah and made on Wednesday the announcement that it’s going to start onboarding new retail and institutional clients, also that it will provide a Visa debit card that converts crypto into US dollars instantly, making payments the same way.

CoinZoom is FinCEN Registered in the US

CoinZoom is a FinCEN registered business that offers money services. It’s regulated by the agency in most US territories and states, which means it has to respect the local laws, including the ones concerning know-you-customer (KYC) and consumer protection. More than this, it also has a money transmitter license in the same country and another one in Australia as a digital currency exchange.

CoinZoom supports the most important cryptocurrencies like the Bitcoin (BTC) and the Ether (ETH), which are paired with the US dollar and provide an asset class fiat gateway. Furthermore, its platform runs a selected proof-of-stake (PoS) coins staking facility that gives holders rewards.

CoinZoom Can Also Be Used as a Remittance Solution

CoinZoom’s CEO and founder, Todd Crosland, said the exchange already has an Apple iOS trading app available and can be used as a remittance solution. Here are his exact words on the Visa debit card news:

“CoinZoom is not only the first U.S. cryptocurrency exchange to provide a Visa card to its customers, but also offers … industry-first features like ZoomMe, CoinZoom’s free Peer-to-Peer crypto and fiat payment system.”

Coinbase Also Released Its Own Visa Debit Card

Let’s not forget that last year, Coinbase, the famous crypto exchange that’s also based in the US and registered with FinCEN and even MSB, has released its own Visa debit card too. However, only its users from the EU and the UK can use it. On Tuesday, Coinbase made the announcement that the same card is now integrated with Google Play.

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Author: Oana Ularu

CME February Bitcoin Futures Expire Today, Trader “Expecting Shenanigans”

  • Open interest on Bitcoin futures contracts on regulated platform CME hits its peak this month
  • CME gap is fully closed at $8,500 and a potential bullish divergence has started to show up which means a bounce could be seen
  • The market is already very volatile and it is further expected to be even more so as bitcoin futures on the regulated platform CME expires today.

Bearish traders have a stronghold within the crypto market with Bitcoin’s (BTC) price down from above $10,000 earlier this week to $8,421. Shorts, meanwhile, are feeling the pain amidst this bloodbath.

Interestingly, on Bitfinex, the longs still dominate the market, making up to 95%. This majority contrasts sharply with the shorts on the Binance, which makes up 65% of its market.

Now, CME Bitcoin futures contracts for February are set to expire. Launched in Dec. 2017 during the market peak, CME recorded considerable growth over the last two years.

After the crypto-winter of 2018, 2019 brought a revival of volume: with prices climbing before dropping towards the second half of the year. However, in Feb. 2020, CME’s platform registered the highest average daily open interest (OI) on Bitcoin futures.

This month marked the highest ever OI on CME bitcoin futures, breaking $1 billion in trading volume for the third time.

However, since hitting $1.1 billion in daily volume on Feb. 18, according to the data provider – Skew Market – the volume on the exchange took a hit. During these two weeks, the daily volume hit lows of $118 million. This week, however, it’s been moving between $270 million and $450 million. OI also hit a low of $220 million down from $338 million on Feb. 14, before reaching a peak at $338 million.

This increased activity means the futures expiry will have a greater impact on BTC prices. In addition, CME has been accused of market manipulation, due to its involvement in the 2017 crash from the $20,000 ATH.

For the moment, Bitcoin is hovering around $8,600 and, according to the trader Crypto Michael said,

“We could see a bounce up to $9,000 from $8,300-8,400.”

“Futures expiring today, as well as current BTC prices, show that the gap is fully closed at $8,500 + a potential bullish divergence is starting to show.”

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Author: AnTy

VanEck CEO: “No Bitcoin ETF Approval In The Foreseeable Future” By The SEC

Jan Van Eck, of Van Eck Associates, and CEO, gave his opinion on the probability of a regulated crypto investment asset taking root in the United States. The long awaited Securities Exchange Commission’s (SEC) approval of a Bitcoin ETF looks unpromising in the near future, and not anytime soon either.

As one of the most sought after investment products, a Bitcoin ETF is expected to influence a spike in the price and adoption of Bitcoin as most experts believe. However, the reverse is not true as the SEC’s constant rejection and withdrawals of applications in 2019, did little in effect to prices, as BTC grew over 95% through the year. The SEC has taken too long in that some sections of the crypto market believe Bitcoin ETFs approvals will never come to life.

This is the case even in the opening weeks of 2020, as Bitwise pulled back its BTC ETF proposal on Jan. 14th leaving optimists in massive doubt. One of the most awaited for Bitcoin ETF, VanEck/ SolidX ETF, faces the same challenges from the SEC having halted its proposal progress three times over the course of 2019, with Gabor Gurbacs – VanEck Director of digital asset strategies, comforting their customers by saying they were still focused on making a Bitcoin ETF a “top priority”.

At the start of 2019, VanEck released a statement announcing the withdrawal of their Bitcoin ETF proposal from the SEC. After re-applying in February, the SEC delayed its decision in March by 45 days, before the company announced yet another withdrawal. In September all hopes for a 2019 Bitcoin ETF were dashed as VanEck announced yet another withdrawal of their proposal in fear of rejection.

No Bitcoin ETF in the foreseeable future

In an interview with Bloomberg, CEO of Van Eck, Jan Van Eck, further spoke on how Bitcoin ETFs are not set to be approved any time soon. He believes the current regulation uncertainty around the area is not set to end anytime soon despite the increase exposure that Americans have to crypto in unregulated markets. He said,

“I don’t see a Bitcoin ETF anytime soon. So yes, the vehicles that allow […] accredited investors to access it, that’s fine. But, still you have tens and millions of retail Americans invested in Bitcoin with no regulatory protection.”

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Author: Lujan Odera